Consider the expected returns (in percent) from the two investment options. Beth
ID: 3246138 • Letter: C
Question
Consider the expected returns (in percent) from the two investment options. Beth claims that the variances of the returns for the two investments differ. Use the following data to arrive at the results. Investment 1 2 6 4 10 8 7 5 6.5 Investment 2 5.2 8 6 2 5 9.5 7 4.5 Test Beth’s claim at the 5% significance level. Which of the following is the correct conclusion?
p-value = 0.7127 > = 0.05; Beth’s claim is correct.
p-value = 0.7127 > = 0.05; Beth’s claim is wrong.
p-value = 0.7127 < = 0.05; Beth’s claim is wrong.
p-value = 0.7127 < = 0.05; Beth’s claim is correct.
Explanation / Answer
ho: variances of the returns for the two investments dont differ significnatly
h1: variances of the returns for the two investments differ (claim)
with p-value = .7127 which is greater than alpha (0.05), i fail to reject ho and conclude that beths claim is wrong.
hence b) is correct.
p-value = 0.7127 > = 0.05; Beth’s claim is wrong.